We use cookies to deliver our online services. Details and instructions on how to disable those cookies are set out at nortonrosefulbright.com/cookies-policy. By continuing to use this website you agree to our use of our cookies unless you have disabled them.

Introduction

The United Nations Convention on International Settlement Agreements Resulting from
Mediation (Singapore Convention) opened for signature in Singapore on August 7, 2019,
and will come into force six months after being ratified by at least three State Parties. So far,
46 States have signed, including China, India and the US. The Singapore Convention
responds to the demand from a growing body of mediation users for an enforcement
mechanism applicable to mediated settlement agreements in cross-border disputes.

The Singapore Convention

Currently, in the absence of an
international regime, mediated
settlement agreements are generally
only enforceable as any other contract.
The exception is where mediation
is undertaken within arbitration
or litigation proceedings and the
settlement agreement is recorded
within, and is therefore enforceable as,
an arbitral award or court judgment.
(See our prior article The Med-Arb Q&A in issue 6 of the International
Arbitration Report). However, that
requires parties to participate in formal
dispute resolution processes in parallel
to mediation, which some argue
undermines the consensual nature
of mediation and adds additional
layers of time and cost. The Singapore
Convention and corresponding Model
Law is intended to provide a solution
– a legal framework within which
settlement agreements resulting
from the mediation of international
commercial disputes may be enforced.
In this respect, it purports to play a
role similar to that of the New York
Convention on the Recognition and
Enforcement of Foreign Arbitral Awards
(1958) (New York Convention), and the
influence of the New York Convention is
apparent in the structure and language
throughout the Singapore Convention.

The Singapore Convention applies
only to mediated settlements of
international commercial disputes,
namely where at least two parties to the
settlement agreement have their places
of business in different States; or the
State in which the parties have their
places of business is different from
either the State in which a substantial
part of the obligations under the
settlement agreement is performed or
the State with which the subject matter
of the settlement agreement is most
closely connected.

Certain types of settlement agreements
are excluded from the scope of the
Singapore Convention, namely
settlement agreements that have been
approved by a court or concluded
in court proceedings, and that are
enforceable as a judgment in the State
of such a court, or those that have
been recorded and are enforceable as
part of an arbitral award. Settlement
agreements pertaining to certain
subject matters are also excluded,
namely family, inheritance or
employment law, and disputes arising
from transactions engaged in by a
consumer for personal, family or
household purposes.

State Parties to the Singapore Convention
are required to enforce applicable
settlement agreements in accordance
with their national rules of procedure
and the conditions set out in the Convention.
In addition, if a dispute arises concerning
a matter alleged to have already been
resolved by a settlement agreement,
State Parties must allow the parties to
invoke the settlement agreement to prove
the matter has already been resolved –
i.e. allowing parties to invoke a settlement
agreement as a defence against a claim.
Again, this must be done in accordance
with national rules of procedure and the
conditions in the Convention. A party
seeking relief must produce the signed
settlement agreement along with
evidence that the agreement resulted
from mediation. Such evidence may take
the form of a mediator’s signature on the
settlement agreement, a separate signed
confirmation document from the mediator,
an attestation by the institution
administering the mediation, or any
other evidence acceptable to the State’s
competent authority. Requests for relief
must be handled “expeditiously” by the
State’s competent authorities.

Grounds for refusing to grant relief

Like the New York Convention, there are
limited grounds under the Singapore
Convention on which a State Party may
refuse to grant relief requested by a party
to a settlement agreement.
Article 5(1) of the Singapore Convention
provides that relief may be refused if the
party opposing relief furnishes proof that

A party to settlement agreement
was under some incapacity.

The settlement agreement is null and
void, inoperative or incapable of being
performed under the applicable law.

The settlement agreement is not binding or final according to its terms; it has been subsequently modified; the obligations in the settlement agreement have either already been performed or are not clear or comprehensible; or granting relief would be contrary to the terms of the agreement.

There was a serious breach by the
mediator of standards applicable to
the mediator or the mediation without
which breach that party would not
have entered into the agreement.

There was a failure by the mediator to
disclose to the parties circumstances that raise justifiable doubts as to the mediator's impartially or independence and such failure to disclose had a material impact or undue influence on a party without which failure that party would not have entered into the agreement.

Further, Article 5(2) provides that relief may be refused if the competent authority where relief is sought finds that

Granting relief would be contrary to public policy

The subject matter of the dispute is not capable of settlement by mediation under the law where the relief is sought.

Will the Singapore Convention provide greater certainty of enforcement?

The Singapore Convention is a positive
development for mediation of crossborder disputes, and one which
should enable easier enforcement of
international mediated settlement
agreements around the world.

However, the language of the Singapore
Convention does allow for some
uncertainties which will likely need to be
clarified in domestic implementing
legislation or procedural rules, in
practice by national courts, and/or by
users of the Convention. To give just a
couple of examples: Article 3(1) provides
that “each Party to the Convention shall
enforce a settlement agreement …”; and
Article 5(1)(e) provides that relief may be
refused if “[t]here was a serious breach
by the mediator of standards applicable
to the mediator or the mediation …;”.
Each of these provisions leave open
important questions. First, what does it
mean for a mediated settlement agreement
to be “enforced”? Second, what “standards”
apply to mediators and mediation?

With respect to the first question, while
arbitral awards define the remedies
available to the parties on the basis
of which enforcement is sought, in
practice mediated settlements generally
do not. Therefore what relief would be
available to a party seeking enforcement
of a settlement agreement under the
Singapore Convention? The answer
is far from certain. In many common
law jurisdictions, the enforcement of a contractual right normally takes the form
of an order for damages reflecting the
value of the right to the aggrieved party.
In exceptional cases, the enforcement
of a contractual right may take the form
of an order requiring that the breaching
party perform the contractual obligation.
Such an order is often reserved for
circumstances where damages would be
unsuitable to compensate the aggrieved
party for the breach. It is unclear under
the Singapore Convention whether
enforcement of a mediated settlement
agreement would take the form of
damages, specific performance; or
another remedy called for under the law
of the jurisdiction in which enforcement
is sought.

Any party contemplating the
enforcement of an international
mediated settlement agreement through
the Singapore Convention would be
wise to define the remedies for breach
of the settlement agreement in the
agreement itself. In so doing, parties
must be aware that certain remedies
may not be enforceable under the laws
of some jurisdictions. Therefore, when
defining remedies, the parties should be
mindful of the most likely enforcement
jurisdiction/s and what remedies are
available in each. These steps, taken at
the outset, will provide greater certainty
that the remedy a party is seeking will
in fact be attainable should it prove
necessary to pursue enforcement.

Turning to the second question, it is not
entirely clear what standards are
contemplated to apply to mediators or
mediation, let alone what might constitute
a breach of such standards for purposes
of grounding a refusal to enforce a
mediated settlement agreement. While
international standards have been
developed to guide certain aspects of
international arbitrations, such as the
IBA Rules on the Taking of Evidence in International Arbitration and the IBA
Guidelines on Conflicts of Interest in
International Arbitration, there are no
equivalent international standards to
guide international mediation. The
International Mediation Institute’s Code
of Professional Conduct is perhaps the
closest to a global standard on mediator
conduct, although it is not known how
widely used it is. Local standards in
enforcement jurisdictions differ across
the globe, and may be applied to assess
mediator conduct with varying enforcement
outcomes across multiple jurisdictions.

The role of mediators in hybrid dispute
processes, such as med-arb, arb-med,
arb-med-arb or MEDALOA (mediation
followed by last offer arbitration), also
potentially complicate matters. In hybrid
dispute processes, parties may shift between
dispute phases and the same person may
conduct the different phases of the
dispute, potentially raising procedural
integrity concerns. Proponents of hybrid
processes argue such concerns are offset
by efficiencies gained in such processes
as compared to traditional dispute
processes which proceed sequentially
through escalating procedures with
separate persons serving as mediator
and arbitrator. In many instances, where
a dispute process concludes in
arbitration or with a mediated settlement
agreement recorded in a consent award,
the Singapore Convention will not apply.
Any procedural integrity issues are
therefore likely to be dealt with within
the framework of the New York
Convention. However, for those cases
concluding in a settlement agreement to
which the Singapore Convention applies,
there may be uncertainty around the
standards applicable to those involved in
hybrid processes.

Again, forward planning is essential
to an enforceable result, including an
understanding of the requirements of jurisdictions where enforcement is
sought, and express agreement by the
parties to the approach to be adopted
and implemented by the mediator.

Recent publications

China Foreign Investment: Expert Q&A – Insurance Sector

Following the first round of liberalization of China’s insurance sector announced at the Boao Forum for Asia Annual Conference in 2018, China has been formulating supporting legislation to further open the sector to foreign investment.

Publication | September 10, 2019

Financial institutions

United Nations Climate Change

Our aim is to help our clients understand the potential opportunities and challenges that COP25 may have on their business.